Employment in an era of automation and low economic growth

Chinese firm, Foxconn, the supplier for both Apple and Samsung, recently retrenched 60,000 people and replaced them with robots.



Ever since the world experienced the Great Recession back in 2008, things are yet to return to normal with the growth of the global economy being greatly affected. For the last six years, the global economy has kept a low economic growth, which has stuck around 3%. This has caused investments around the world to slow as well as lead to the reduction of global trade growth, in turn causing employment, labour productivity and wages needed to improve the living standards of the people to greatly suffer.

Low growth has been a major problem for not only the developing countries but for a number of the industrialized economies as well. For example, the U.S economy has been experiencing a low growth with the annual rate of growth in 2016 standing at 1.6%. On the other hand, in developing countries, governments and international financial institutions have been forced to keep changing their growth forecast downwards. In Kenya for instance, the World Bank downgraded its growth forecast for the year 2017 from 5.5% to 4.9%.     

As a result, the rate of employment has really been affected in many economies around the globe.  Low economic growth has seen organizations decide to cut back on production as it causes consumers to spend less thus causing demand to reduce.  With demand reduced producers have had no other choice but to reduce their supply. This has seen them require fewer workers thus forcing them to lay off some of their staff and retain a small number that is able to supply enough products to match the demand.

In some worst-case scenarios, the organizations have to completely shut down leaving a number of people unemployed. Locally, organizations such as Eveready and Cadbury Kenya closed down their operations leaving more than 400 people without jobs. In addition, due to the uncertainty created in the market as a result of low economic growth, most of the organizations tend to be reluctant towards hiring. This causes the level of unemployment to keep rising as more people end up without jobs.

Apart from the uncertainty created by low economic growth, we are currently living in an age of increased automation whereby technology is coming up with easier ways to accomplish tasks leading to the replacement of human labour with machines. This is happening at almost all business sectors causing the level of unemployment to keep rising in most economies around the world. This is not only a problem for those who are looking for jobs but for those who are already employed as well. As machines require less supervision and are less expensive than human labour, employers are replacing their staff with machines at a high rate.

China, as an example, has long been defined as the global job creator. However, due to technological advancement and low economic growth; some organizations in the country have resulted to replacing human labour with machines. Chinese firm, Foxconn, which is a supplier for both Apple and Samsung, is among these organizations as it recently retrenched 60,000 people and replaced them with robots.

The way forward

As low economic growth across the globe seems not to be going away anytime soon and automation keeps becoming more popular, the future seems bleak especially in terms of unemployment. If the system is to remain the same then there is no way it will be able to generate enough jobs to satisfy everyone’s needs. The problem is expected to intensify further as time goes on because the world population is increasing at a high rate. According to data from the United Nations, Africa’s population is expected to increase to 2.5 billion people from the current 1.3 billion by the year 2050.

Henceforth, changes need to be done to the current system in order to ensure job opportunities are created in such an environment that tends to eliminate jobs instead. For starters, there is a need to promote technological courses among the youth to ensure that they have the right skills needed to navigate the business sector, which is expected to be fully automated in the future. Skills in technology are important as the world continues to advance.

Secondly, it is time to take up a different policy regarding the current system on the growth economy. For a long time the norm has been that to achieve growth there had to be a relationship between the producer and the consumers. However, the relationship between the two is usually impersonal in most cases henceforth, making it easy to replace the human labour with robots as they can do the same work more efficiently. Therefore, there is a need to move away from measuring value according to the quantity of the cycle of  production and consumption.

Instead, we must start determining value by the quality of human interaction in the cycle. Using a barber as an example, the current system measures value according to the number of customers he can attend to in a specified period of time, this work is able to be done by a robot as well thus replacing the labour can be done at any time. However, if the system was changed so as to ensure that the value is determined by the relationship of the barber and the customer then value will not be lost in exchange for profit. As a result, it would be difficult to replace the barber with a robot as it would not be able to replicate the same.

Apart from changing the system, we need to reassess productivity in today’s world. ‘The faster a task is done the better’ has become the motto among many professional activities however; this does not necessarily mean that things have been done in the right way. This in turn undermines the relationship between parties involved (producer and consumer) and because the economy relies on these relationships, its growth usually starts to crumble even though some sectors experience profits.

With the economy continuing to crumble, more people tend to end up losing their jobs while only a small number of people are able to enjoy profit thus promoting economic inequality. In order to do away with this, there is a need to adapt a circular economy in order to optimize production, which in turn will leave everyone empowered and not just a selected few. 

The current situation, which has the world economy experiencing low growth, needs to be handled with the utmost care or else we might end up leaving our future generations jobless. With technological advancement always changing and being adopted widely around the world, it is time to focus on these policies so as to reduce the level of unemployment and start creating job opportunities that will lead to high economic growth around the globe.